News

CME: Feedlot Cattle Marketings Looking More Promising

27 October 2015

US - The USDA's Cattle on Feed report showed last week that although steer and heifer slaughter started to ramp-up as September progressed, it was not enough to bring feedlot cattle marketings up to levels of September 2014, write CME analysts Steve Meyer and Len Steiner.

Still, the year-over-year decrease in marketings of 2.4 per cent was one of the more promising marketing numbers, that is smallest year-on-year percentage declines, we have seen this year.

Out of the 12 states that are tracked, eight of them showed increases in marketings during September compared to the previous month. Those with an increase included Minnesota, Nebraska, Iowa, and South Dakota.

Seasonally, on a national level, marketings usually decrease or stay flat month to month from August to September. This counter-seasonal increase is supportive that a majority of the over fattened cattle were contained in those four states, and some progress has been made to move feedlots towards more current marketings.

An important statistic in the report was placements of animals into feedlots, which was down 4.2 per cent year-over-year. Placements in September of this year were 2.9 per cent below 2013’s, we find this to be a useful comparison as placements in September of 2014 were above those in 2013.

The placement weight category data showed that the 800-pound and over category posted the only number above year ago. This aspect is important when looking at marketing patterns in coming months.

The 800-pound and over weight category has been equal to or above its respective year ago number each month so far in 2015 and speaks to generally good grazing conditions this past summer and feedlots’ unwillingness to purchase expensive feeder-weight animals.

Bringing these numbers together, cattle on feed inventory as of October 1 was 2.3 per cent above 2014’s. Down slightly (percentage increase wise) from the 2.7 per cent increase year-over-year as of September 1.

In a longer term context, the on-feed count was the largest for October 1st since 2012. In the Cattle on Feed report, quarter ending numbers of heifers and steers in feedlots were also provided.

Compared to third quarter of 2014, the percentage of steers in feedlots was up 7 per cent and the percentage of heifers was down 7 per cent. These numbers are almost identical to second quarter’s composition, and consistent with the industry trend of increasing breeding herd numbers.

Moving on to a weekly production and price summary, on the cattle side, both estimated weekly slaughter and live fed steer price were down slightly compared to the week before.

There were reports of live fed steers selling for $136 per cwt. Friday afternoon in Kansas, before this issue of the DLR went to press. Feeder cattle prices at Oklahoma City were steady to $5.00 per cwt. higher last week.

The Choice beef cutout (wholesale) value recorded an impressive gain of almost $7.00 per cwt. for the week to average $216.03 per cwt. Interestingly, the Cutter cow cutout value reported by USDA-AMS was down almost $6.00 per cwt. for the week to $186.72, the lowest for any week since mid-February 2014.

Hog and pork prices were down slightly across the board compared to the previous week. Federally Inspected slaughter levels were largely unchanged. Bellies continue to be priced well above a year ago levels.